The inspection trip and negotiations, if not "commercial activity carried on in the United States" within the meaning of the Act, are certainly acts in the United States in furtherance of commercial activity in Honduras. Furthermore, there is a close nexus between plaintiff's claims and the defendants' acts in the United States -- plaintiff's suit is based on the contractual relationship which resulted from those negotiations. See Gibbons v. Udaras na Gaeltachta, 549 F. Supp. 1094 (S.D. N.Y. 1982).
Defendants argue that the contracts were executed in Honduras and a breach, if one occurred, occurred in Honduras. However, the situs fiction of contract formation is irrelevant under the FSIA, Gibbons, 549 F. Supp. at 1114, n.9, and the location of the breach is likewise immaterial. Velidor, 653 F.2d at 820; Sugarman, 626 F.2d at 273. This suit arises on a contract or series or contracts which derive at least in part from negotiations between the parties occurring in this country. See Gibbons, 549 F. Supp. at 1114.
The third clause of § 1605(a)(2) also permits the assertion of jurisdiction here. That clause provides an exception to immunity where the foreign defendant's acts, though outside the United States, cause a "direct effect" within the United States. Here plaintiff complains that it has suffered a direct financial loss in this country as a result of defendants' conduct.
There is some dispute among the courts as to whether economic injury alone will satisfy the "direct effect" requirement. Several courts have refused to find jurisdiction where the only direct effect in the United States is financial loss by the plaintiff. Magnus Electronics, Inc. v. Royal Bank of Canada, 620 F. Supp. 387 (N.D. Ill. 1985); Exchange National Bank of Chicago v. Empresa Minera del Centro del Peru, S.A., 595 F. Supp. 502 (S.D. N.Y. 1984).
We prefer the view of the Second Circuit in Texas Trading, 647 F.2d at 312. A corporation wronged in a commercial transaction suffers only financial injury. Even those more intangible injuries, such as damage to business reputation, are nothing more than another formulation of an aspect of financial injury. The relevant question then is whether the injury to plaintiff is direct.
Defendants have argued that the loss in this case was sustained by plaintiff's Panamanian subsidiary. If true, such a loss would be indirect to plaintiff and would not satisfy § 1605(a)(2). See, Carey v. National Oil Corp., 592 F.2d 673 (2d Cir. 1979). However, defendants have been unable to establish this premise with the evidence presented and since foreign states bear the burden of establishing immunity we cannot deny jurisdiction on this ground. E.g. Transamerican S.S. Corp. v. Somali Democratic Republic, 247 U.S. App. D.C. 208, 767 F.2d 998 (D.C. Cir. 1985); Vencedora Oceanica Navigacion S.A. v. Compagnie Nationale Algerienne de Navigation, 730 F.2d 195 (5th Cir. 1984).
For the reasons stated we conclude that the exceptions stated in the FSIA at 28 U.S.C. § 1605(a)(2) apply to all defendants.
III. Minimum Contacts
Questions 3 and 4 of the Texas Trading framework are easily resolved. This litigation is plainly within this court's "judicial power" created by Article III, and we have earlier determined that actual service will suffice to establish personal jurisdiction, even if § 1608 was not strictly followed.
We come then to an analysis of minimum contacts. Even if the exceptions to immunity under the FSIA are satisfied, we must determine if jurisdiction over the foreign defendants comports with due process. Velidor, 653 F.2d at 819, n.12; Texas Trading, 647 F.2d at 313. Simply put, do defendants have sufficient minimum contacts with the United States to justify the assertion of jurisdiction over them.
As mentioned above, a mere economic impact on a United States plaintiff, without other contact by the foreign defendant with the United States, will not satisfy requirements of due process, although it may satisfy one of the sovereign immunity exceptions of § 1605(a)(2). See, Magnus Electronics, 620 F. Supp. 387; Exchange National Bank, 595 F. Supp. 502. Here there is no question that defendants or their agents engaged in activities in the United States which contributed to the agreements which form the basis of this action. Defendants availed themselves of the benefits of the marketplace in this forum to further their endeavors and such activity will suffice for the minimum contacts requirement.
Defendants argue that the only contacts with the United States were undertaken by and for Fundiciones alone, and that CONADI and the Republic were merely passive guarantors and had no contact with the United States in this matter.
CONADI's passivity is hardly apparent. CONADI created and owned a majority interest in Fundiciones, and the two shared many common officers and agents. But, in any event, by defendants' own admission Fundiciones was an agent of the sovereign, created to accomplish the government's objective of economic development. The acts of Fundiciones and its agents were performed for the benefit of CONADI and the Republic. In these circumstances the acts of the agent will be attributed to the principal in assessing minimum contacts. Texas Trading, 647 F.2d at 314; Gibbons, 549 F. Supp. at 1114, n.10.
The individual defendants have also challenged jurisdiction on the ground that they lack the requisite minimum contacts with the forum. Plaintiff has not directed us to any evidence to establish contacts between the United States and the individual named defendants. Also, acts of an individual in his corporate capacity will not subject the individual to personal jurisdiction. E.g., Techno Corp. v. Dahl Associates, Inc., 521 F. Supp. 1036 (W.D. Pa. 1981) and 535 F. Supp. 303 (W.D. Pa. 1982). Finally, we note that plaintiff's claims against the individual defendants are based on allegations of misrepresentations made in Honduras concerning the financial health of the Honduran corporations and the Honduran bankruptcy process. None of these averments reveal any minimum contacts with the United States which have the requisite nexus with the asserted cause of action. The individual defendants will therefore be dismissed for lack of personal jurisdiction.
IV. Forum Non Conveniens
Defendants move to dismiss on a forum non conveniens theory. Defendants argue that this forum is inconvenient for them and potential witnesses, and since Honduran law is applicable, the matter should be tried in a Honduran court.
We have not yet determined what law is applicable but even if it is necessary to interpret Honduran law, we do not see this as an insurmountable obstacle. As for convenience of the parties, the scales are even. Regardless of the forum some parties and witnesses will be inconvenienced by travel and distance. However, we perceive no prejudice or serious impediment to defendants' proceeding in this forum. In fact defendants' agents or officers found no difficulty in entering this forum to conduct business, so they cannot complain that they cannot defend here. All things being equal then, the plaintiff's choice of forum will not be disturbed.
The corporate defendants and the Republic of Honduras are subject to the jurisdiction of the court under exceptions to sovereign immunity defined by the FSIA and under a minimum contacts analysis of due process. The individual defendants will be dismissed for lack of personal jurisdiction.
Service of process did not comply with the FSIA, but will suffice where actual notice was received. Service upon Fundiciones must be effected in accordance with the Act, within 60 days, or the defendant will be dismissed.
The plaintiff's choice of forum will not be disturbed.
An appropriate order will be entered.
AND NOW in accordance with the accompanying Opinion it is hereby ORDERED:
1) All individual defendants are DISMISSED for lack of personal jurisdiction;
2) The motion of defendants CONADI and the Republic of Honduras to dismiss on issues of jurisdiction, sovereign immunity, and forum non conveniens is DENIED.
3) Plaintiff shall effect service on defendant Fundiciones in accord with 28 U.S.C. § 1608 within 60 days, or suffer dismissal of that defendant.
SO ORDERED this 18th day of March, 1987.